Policy Uncertainty and Rising Costs Weigh on U.S. Housing Market in 2019

The U.S. financial and housing markets have experienced significant volatility in the initial months of the presidential term, largely due to policy changes, tariffs, and economic uncertainties. Mark Garland, a mortgage-servicing rights expert at SitusAMC, highlights that the overarching issue is market apprehension about unpredictable policy shifts rather than any single factor like tariffs or interest rate changes. This uncertainty is causing potential homebuyers and refinancers to delay decisions, impacting market momentum.

Tariffs and trade tensions remain a notable source of unpredictability, with threats of escalation keeping consumers cautious. Alongside economic uncertainty, rising housing affordability challenges persist, driven by increased home prices and climbing homeowners’ insurance and property tax costs, particularly in states like Florida and Texas. Garland also points out that growing populations in more affordable smaller metropolitan areas are forcing these regions to raise property taxes to support infrastructure needs.

State-specific property tax systems based on original purchase price create additional financial implications for homeowners considering refinancing, notably in California, Florida, and Michigan. The reluctance to refinance also reflects concerns about potentially doubling tax liabilities, affecting market fluidity. Data shows a contraction in single-family housing starts, with a 2.1% decline reported in April, signaling a cautious market environment heading into the traditional peak summer buying season.

The housing market outlook remains subdued with expectations of an anemic summer season due to consumer wariness about job security and overall economic costs. Furthermore, ongoing speculation about the future status of government-sponsored enterprises Fannie Mae and Freddie Mac introduces foundational uncertainty. Questions about their potential privatization and government guarantees add to the complex risk environment affecting mortgage lending and housing finance.

Overall, the episode underscores key challenges faced by the U.S. housing sector including policy unpredictability, increased regulatory and tax burdens, and fundamental concerns about government intervention in housing finance. These factors collectively contribute to a cautious consumer base and sluggish market activity in 2019.